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An Overview of the Russian Vegetable Growing Sector

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An Overview of the Russian Vegetable Growing Sector 2017 March An overview of the Russian vegetable growing sector Table of Contents Industry Profile .................................................................................................................................................... 2 Greenhouse vegetable production in 2016 ........................................................................................................ 4 Imported greenhouse vegetables ....................................................................................................................... 5 Leading producers of greenhouse vegetables in Leningrad region .................................................................... 5 Main problems in vegetable growing sector ...................................................................................................... 6 1 2017 March Industry Profile By greenhouse area, Russia is far behind the developed EU countries, Japan and Turkey. Spain has the largest concentration of greenhouses in Europe. Japan stands the second, and Turkey is the third in this ranking. The total greenhouse area in Russia is only 1800 ha. Table 1. Total Greenhouse Area by Country Country Total Greenhouse Area Spain 52 000 ha Japan 42 000 ha Turkey 35 000 ha Italy 20 000 ha Netherlands 10 000 ha France 8 000 ha Poland 7 000 ha Russia 1800 ha Source: Association "Teplitsy Rossii" (Greenhouses of Russia) The food ban introduced by Russia as a countermeasure to western sanctions in 2014 attracted many new investors to this sector. Investors with different backgrounds (agriculture, food retail, construction) came into the vegetable growing sector and started investing into greenhouses. Over the last four years, the total greenhouse area in the country has increased by 850 ha. Table 2. Total Greenhouse Area by Year Year Greenhouse area 2014 188 ha 2015 206 ha 2016 110 ha 2017* 350 ha *Forecast for 2017 Source: Association "Teplitsy Rossii" (Greenhouses of Russia) Total area of greenhouses rebuilt in 2015: 50 ha Total area of greenhouses installed and commissioned in 2015: 206 ha Greenhouse area to be put in operation in 2017: 350 ha Greenhouse area to be further developed by 2020: 2 000 ha North-West Russia still lacks greenhouses – 150-180 ha. 2 2017 March Federal districts developing vegetable growing: Central Federal District Southern Federal District Volga Federal District North-Caucasus Federal District. TOP-5 greenhouse vegetables producing regions (thousand tons): Krasnodar krai (market leader) – 88 Republic of Bashkiria – 66,5 Karachay-Cherkessia – 45,8 Stavropol krai – 42,4 Republic of Tatarstan – 37,7 The Belgorod region is planning to create a greenhouse cluster by 2020. At the moment, the total area under greenhouses is 55 ha. According to the regional development program, the concentration area of greenhouses should grow to 500 ha by 2020. In 2017, two investment projects are due to be finished. The total area of new greenhouses will be 30 ha. RENOVA has recently announced their plans to invest in greenhouse farming in Russia. The company is planning to build greenhouse complexes in four Russian regions: Sverdlovsk region, republic of Chuvashia, Perm krai and republic of Komi. The management of Renova have already signed agreements of intent with the four governors. The total designed area of greenhouses will be 100 ha. The total investment is 25 billion roubles. The annual designed capacity is 75 000 tons of cucumbers and tomatoes. (Link:http://www.agroinvestor.ru/companies/news/26213-viktor-vekselberg-postroit-teplitsy-v-chetyrekh-regionakh/) 3 2017 March ECO-CULTURE is the biggest greenhouse grower in Russia. The company is based in Stavropol krai, has packaging lines, a distribution centre in Stavropol and a distribution centre in Moscow region. The total greenhouse area is 52 ha. Eco-Culture is planning to build greenhouses in Tula region, Voronezh region and Moscow region. Eco-Culture is planning to come to North-West Russia. The company is going to take over OOO “KRUGLY GOD”, the third biggest grower in Leningrad region. The bid worth 2,5 billion roubles is about to be closed. (Link: https://www.dp.ru/a/2017/03/20/Kruglogodichnij_aktiv) In general, Russian greenhouse vegetable market is characterized by asset consolidation in the hands of big investors. Big players have more resources and possibilities to compete in such a capital-intensive sector. Greenhouse vegetable production in 2016 The domestic production of fresh greenhouse vegetables does not satisfy the domestic demand. Share of domestic vegetables: approximately 47% Total greenhouse vegetable production in 2016: 800 000 tons Leading vegetable: cucumber (70%) Source: Association "Teplitsy Rossii" (Greenhouses of Russia) Champignon mushroom growing is a new popular trend in Russian agriculture. 4 2017 March Imported greenhouse vegetables The share of imported greenhouse vegetables declined considerably after the introduction of the food ban in August 2014. In 2013, 1225 thousand tons of greenhouse vegetables were imported into Russia, while in 2015 only 928 thousand tons was imported. Share of imported greenhouse vegetables over the period 2010-2015, thousand tons Structure of imported greenhouse vegetables in 2015: Vegetable Volume imported into Russia Tomato 655 000 tons Cucumber 143 000 tons Paprika 125 000 tons Eggplant 24 000 tons Lettuce 5 000 tons Leading producers of greenhouse vegetables in Leningrad region Leading greenhouse growers by greenhouse area (hectares): ZAO Vyborzhec (market leader) - 15,8 ZAO Karelsky - 7 OOO Krugly God - 7 ZAO Rosa – 5,1 ZAO Molodezhny - 4 OOO Premium – 2,5 5 2017 March Source: Delovoy Petersburg, Issue No. 056, dd. 9 April 2015 Year Vegetables production in Leningrad region 2013 26 400 tons 2014 21 700 tons 2015 23 500 tons Year Vegetables consumption in St. Petersburg and Leningrad region 2013 140 000 tons 2014 180 000 tons 2015 227 000 tons ZAO VYBORZHEC is planning to invest 2,2 billion roubles in their greenhouses. The company wants to build a new power station and greenhouses on the territory of 5 ha. The investment project will enable the company to increase their greens production by 2000 tons and tomato production by 1000 tons. (Link: http://www.rbc.ru/spb_sz/09/03/2017/58c162459a79471227e6e897) Main problems in vegetable growing sector Experts point out that Russian growers face many challenges including, but not limited to: Shortage of greenhouse capacity High energy costs Shortage of distribution centres and storage facilities High interest rates for growers Bad selection and seed breeding (share of imported seeds ranges from 20 to 80%). 6 2017 March Sources 1. Association “Greenhouses of Russia” http://rusteplica.ru/ 2. Agricultural platform “Agroinvestor” (www.argoinvestor.ru) 3. Expert North-West Russia http://expert.ru/ (magazine) 4. Information and Marketing Agency RBC www.rbc.ru 5. Delovoy Petersburg https://www.dp.ru/ (news-paper) 7 .
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